We’ve already looked at same-store sales growth for casual dining restaurants. Now let’s look at another revenue driver: unit growth.
All casual dining restaurants are primarily company-owned. So we have to be careful when we compare unit growth since opening new company-owned restaurants requires more capital expenditure. The median unit growth for casual dining restaurants in 1Q16 was 6.3%.
To have more control and implement their initiatives faster, casual dining restaurants are focused more on adding company-owned restaurants than franchised restaurants.
Among the five companies we’re covering in this series, Buffalo Wild Wings (BWLD) is expanding its business the fastest. In the last 12 months, the company has increased its unit count by 8.8%. During the same period, BWLD added 102 company-owned restaurants, while franchised restaurants were reduced by six units.
BWLD is followed by Texas Roadhouse (TXRH) with unit growth of 8.1%. TXRH has added 33 new company-owned restaurants and increased franchised restaurants by four. The Cheesecake Factory (CAKE) has added 12 units to increase its unit count by 6.3%.
Brinker International (EAT) has been the slowest among our five companies to expand its business in the last 12 months. The company has added only 18 units, which increased its unit count by 1.1%.
EAT has added 108 company-owned restaurants, which includes acquisitions of Pepper Dinning’s 103 franchised Chili’s restaurants. However, during the same period, franchised restaurants decreased by 90 units.
EAT is followed by Bloomin’ Brands (BLMN), which has increased its overall unit count by 1.4%. The company added 19 company-owned restaurants and two franchised restaurants. BLMN forms 0.26% of the holdings of the iShares Russell 2000 Growth ETF (IWO).
Next, let’s look at the EBIT (earnings before interest and tax) margins for our casual dining restaurants.